Is Yahoo's Business in Trouble?

On Tuesday, Yahoo annouced its much-anticipated third-quarter earnings. Wall Street has been paying close attention to the Internet giant following rumors that AOL may look to buy Yahoo. How's the company's health these days?

This Quarter Was Rough for Yahoo, writes Kara Swisher
at All Things Digital:

The revenue weakness is worrisome, as it
indicates a lack of search advertising growth at Yahoo, even as
competitors such as Facebook expand rapidly as social networking
explodes. In addition, Google also turned in stellar quarterly results
earlier this week, along with Apple. Even more important is a weaker
outlook for the fourth quarter. In addition, the key metric of page
views was down four percent in the quarter, while employee growth was up
seven percent."

Mr Morse said total pages viewed on Yahoo
fell 4 per cent in the most recent quarter from a year earlier, but
total minutes spent increased 3 per cent from the second quarter and the
number of unique visitors rose.

Yahoo’s
latest ho-hum performance again raises questions about whether Yahoo’s
new CEO Carol Bartz (pictured left) can make good on her promise to turn
the company around since coming on board in 2009. Bartz has come under
criticism for mishandling relationships with important partners in Asia
and allowing high turnover in Yahoo’s executive ranks. Then there are
the rumors that AOL and a number of private firms are planning to pick
up the search provider and take it private.

It isn’t immediately
clear where Yahoo goes from here, but one thing is obvious: investors
didn’t appreciate Yahoo’s performance. The results ignited a minor
sell-off and brought Yahoo’s shares down about 2.9 percent to $15.47 in
extended trading today.

Good Moves on Cost-Cutting, writes Kara Swisher
in a separate post: "Slightly above investor expectations with
operating margins improving nicely to 12 percent from six percent a year
ago. CEO Carol Bartz sure can cut costs."

Yahoo Is Buying Up Its Own Stock, writes Erick Schonfeld
at TechCrunch: "Bartz also revealed that so far this year, Yahoo has
bought back 7 percent of its own shares. As investors flee the stock,
Yahoo may have to continue to repurchase shares to keep the stock
afloat, unless some of these initiatives begin to drive overall revenue
growth. Bartz kept repeating the mantra “local, mobile, social, and
video,” suggesting that she hopes that is where Yahoo’s advertising
growth will come from in the future."

Asked to comment on the private equity buyout rumors,
Bartz was surprisingly tight-lipped: “As tempting as it is to tell you
what I really think, I cannot comment on rumors about hypothetical this
or hypothetical that. We like our strategy, we like our progress, that
is what I am focused on.” Also, she managed to make it throughout the
entire conference call without swearing.